Better care not always better business
May 21, 2013 in Medical Technology
Transparency is a touchy subject in healthcare. It’s one of the last market strongholds desperately clutching to its principles of price secrecy, and it won’t go down without a fight.
But many experts say this stands as one of many reasons the industry continues to drag its feet in the innovation arena. A provider generally functions as a profit-driven business, and if the consumer remains unable to compare hospital prices and outcomes, the chances of crafting effective incentives to improve quality and reduce costs are effectively nearing zilch.
Are hospitals with the most prestigious reputation necessarily producing the best outcomes? Can a patient go to another hospital and have a medical procedure done, same quality but for a fraction of the cost? Many emphatically nod their heads yes. But have fun prying the data out of industry’s clenched fists.
There are many reasons for the lack of transparency in healthcare, said Alan Russell, Highmark Distinguished Career Professor at Carnegie Mellon University.
[See also: Most states fail to provide healthcare price transparency to patients.]
Nationwide, providers are struggling financially due to low Medicare and Medicaid reimbursements, declines in patient volumes, upticks in charity cases and bad debt cases. If patients are incentivized to shop around for prices, that may represent enormous implications for a hospital’s bottom line.
“Many of incentives that exist in our healthcare system are not aligned to deliver the right care, at the right time, at the right place,” said Russell at the Boston iHT2 Health IT Summit on May 7. The healthcare industry, he explained, has grown up designing therapies to treat symptoms, which is fundamentally flawed but much more lucrative. “Who would make money from (curing a disease)?” he asked.
Russell cited the work of Blair Jobe, MD, of the Allegheny Health Network, who used regenerative medicine to more effectively treat esophageal cancer, which currently has a 90 percent mortality rate within five years of diagnosis.
Currently, when a patient is diagnosed with esophageal cancer, often an esophagectomy is recommended. This procedure comes with a 50 percent complication rate and up to a 21 percent mortality rate. In other words, there’s opportunity for improvement.
With numbers like these, “Why is that the treatment?” Russell asked.
Pricewise, however, the surgery itself can range from $21,000 to $66,000 — even these numbers are difficult to find — with overall hospital charges reaching a potential $150,000 due primarily to length-of-stays, which generally average 16 days.
[See also: IOM report: Informatics, transparency and data to fix healthcare crisis.]